Trusts and Estates
The Power to Transmit Property at Death: Justifications & Limitations
· Plenary Remarks
o What is a gift? It is something that is given to someone with nothing given in return.
o Why do people give things away at death? Out of necessity. Dead people can’t take shit with them.
o Determination of Death
· NJSA 26:6A-2: Declaration of Death Base on Cardio-Respiratory Criteria
· NJSA 26:6A-3: Declaration of Death Based on Neurological Criteria
· NJSA 3B:27-1(a): Death of a Resident of Nonresident Presumed After 5 Years’ Absence of Exposure to Specific Catastrophic Event
§ Date of death is presumed to be at the end of the 5-year period unless there is sufficient evidence for determining that death occurred earlier.
o Disposition of Human Remains
· Are dispositional preferences enforceable?
· The general rule is that a person does not have a property interest in his body after death. Therefore, you cannot control the disposition of your body after death.
· Primary objectives of NJ law:
§ Health & safety in disposal of bodies
· NJSA 26:6-3: Prohibition of Public Funerals
· NJSA 26:6-5: Cemeteries Dangerous to Public Health
· NJSA 26:6-36: Depth of Burials; Bodies in Private Vaults
§ Documentation and process
· NJSA 26:6-6: Execution of Death Certificate
· NJSA 26:6-8: Duty to Furnish Particulars; Verification
§ Registration of deceased veterans
· NJSA 26:6-4.2: Undertaker to Make Inquiry, Report, Penalty for Failure to Report
o Intestate Estates – A will is not left that controls all property owned by decedent
· Why should you have a will?
· Why do most decedents die intestate?
· How should the decedent’s property be distributed in the absence of a will?
· How should the decedent’s heirs be determined?
· Why do we care about the decedent’s wishes?
· Should the decedent’s intent be implemented even if it’s offensive or repugnant?
§ What is an offensive or repugnant wish?
· What should be required to make a valid will?
· What if the executor refuses to distribute property according to the will?
· How do you interpret a will?
§ What evidence would you admit?
· Should will substitutes be allowed?
· The Right to Inherit & the Right to Convey
o Hodel v. Irving (1987)
· §207 of the Indian Land Consolidation Act called for any undivided fractional interest of Indian land that was less than 2% of the total tract or brought the owner less than $100 in the preceding year to escheat to the tribe.
· Held: Complete abolition of both descent and devise of a class of property is a violation of the Takings Clause and “goes too far” as it does not allow a land owner any means of passing on his interest other than an inter vivos transaction.
§ The land was a tenancy in common, making it difficult for the many owners to agree on what to do with the land. Leasing it out was the only option. The value of the land took a significant hit and the administration of the land became much too difficult as a result, which was a big reason for §207.
§ Takings – When the government obtains private land for public use without just compensation.
§ What was being taken away in this case? The power of testation was taken from owners who fell under the 2%/$100 threshold.
§ First Issue: Does §207 interfere with investment-backed expectations?
· The Court found that there were no investment-backed expectations. Because the land has stayed with the Tribe for so long and the property interests are usually gifted or devised, there is no expectation of investment.
· Weighs against finding a taking.
§ Second Issue: Is there an average reciprocity of advantage?
· Losing interest in the land will be a burden on the individual owner or possible interest holder, but the land escheating to the Tribe provides a greater advantage to all Tribe members than the burden on the individual.
· Weighs against finding a taking.
§ Third Issue: Does §207 completely abolish the power to transfer?
· Decent and devise were abolished while inter vivos transactions were still acceptable. Inter vivos transactions are too complex (revocable trusts), however, to be the only option available for someone to transfer property at death. §207 amounts to complete abolition.
· Weighs heavily in favor of finding a taking.
§ Major Rule: There is a constitutional right to control the disposition of property at death.
o Shaw Family Archives v. CMG Worldwide (2007)
· Marilyn Monroe’s successor in interest brought suit against a company that had used her image in t-shirt sales and created a website to sell licensing rights to images of Monroe. The successor in interest claimed that it held all publicity rights.
· Held: A decedent cannot pass along an interest in property that the decedent does not own. Likewise, such property rights that are created by statute after the death of decedent do not apply to the decedent unless there is a retroactivity clause.
§ Residuary Clause: Disposes of everything in an estate that is not specifically given to another person. “To A, the entire remaining balance.”
§ Postmortem right of publicity – did not exist at the time of Monroe’s death. Still does not exist in New York. California and Indiana now have a statutory right.
§ First Issue: Did Monroe own a right of publicity at her death?
· At the time, there was no property interest in publicity. You cannot transfer property that you do not own via will. Property Owned at Death Rule
· Looking at Monroe’s intent, it is unlikely that she intended to transfer such a right to Lee Strasberg through the residuary clause, or “boilerplate language,” since she probably never contemplated such a right.
§ Second Issue: If she does not own the right, who does?
· If the interest even exists, SFA argues, it belongs to her heirs because she did not pass it along in her will. The Court agrees with this assertion.
§ This rule was abrogated by the Uniform Probate Code, which calls for all property acquired before or after the testator’s death to go to the residuary beneficiary.
· The Policy of Passing Wealth at Death
o Would the abolition of inheritance provide equality in opportunity?
· The Problem of the Dead Hand
o Restatement (Third) of Property: Wills & Other Donative Transfers (2003)
· §10.1 – A donor’s intent should be considered above all else when interpreting a donative document.
· The main function of the law in this area is to facilitate rather than regulate.
o Shapira v. Union National Bank (1974)
· Plaintiff’s father left him a 1/3 interest in the estate, contingent on the plaintiff marrying a Jewish girl with two Jewish parents within seven years of the father’s death.
· Held: Such provisions do not violate the 14th Amendment (Equal Protection or Due Process) as they act only as restrictions on inheritance, not marriage. It is a fundamental rule that a parent may disinherit his children.
· Held: A partial restraint on marriage which imposes only reasonable restrictions as valid, and not contrary to public policy. Furthermore, such a condition is not restrictive of the beneficiary’s faith. Such a restriction would be void, but is not the case here.
§ Under the Restatement, a restriction imposing a restraint on marriage is unreasonable if the marria
· The car has legal title and can probably avoid probate, depending on the laws of the state. In NJ, you would have to probate the car.
§ Probate would apply to the car, furniture, and mutual fund.
3. Absolutely. Transfer of title in real property is necessary, and the clock starts running on collections.
4. YES. A will should always exist when possible, even if the estate is small. If he dies intestate, he has no control over what becomes of his personal property. If he doesn’t want the 50/50 split described in problem 2, he needs a will.
o Brown Problem
· Lots of questions. I don’t know the answer to most of them.
· The value of the real property owned by the Browns, particularly Howard, makes it likely that probate will be required if everything is transferred by will or intestacy. Alternative measures could be taken to avoid probate, especially when considering the home and the mother’s home.
· Professional Responsibility
o Simpson v. Calivas (1994)
· Defendant was plaintiff’s father’s attorney who helped draft father’s will. The will left all real estate to the plaintiff except for a life estate in the “homestead,” which was left to the father’s second wife. There was a question of what “homestead” meant, and the probate court found it to mean the home and all surrounding land. The probate court did not admit notes from the defendant which indicated that the father sought only to leave the house to the second wife and all surrounding land to the plaintiff.
· Held: An attorney who drafts a testator’s will owes a duty of reasonable care to intended beneficiaries.
§ Although there is no privity between a drafting attorney and an intended beneficiary, the obvious foreseeability of injury to the beneficiary demands an exception to the privity rule.
§ An intended beneficiary states a cause of action simply by pleading sufficient facts to establish that an attorney has negligently failed to effectuate the testator’s intent as expressed to the attorney.
§ Where a client has contracted with an attorney to draft a will and the client has identified to whom he wishes his estate to pass, that identified beneficiary may enforce the terms of the contract as a third-party beneficiary.
o A. v. B. (1999)
A married couple hired the same firm to plan both of their wills. When the firm became aware of the husband’s illegitimate child, it sought to inform the wife as that child’s presence had an effect on distribution of the wife’s estate.
Held: Confidential communications can be disclosed to the extent the lawyer believes necessary to rectify consequences of illegal, criminal, or fraudulent action.
§ RPC 1.4(b) – Duty to keep clients informed
§ RPC 1.6 – Lawyer/client confidentiality & informed consent
· (c) Allows for disclosure to rectify a crime/fraud that has already occurred
§ Joint representation letters should include an express waiver of confidentiality between the parties in order to avoid this problem.